Impact of rewards management system on employees job performance through work motivation a study in companies in ho chi minh city

International School of Business --- Nguyen Thi Ngoc Suong IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE'S JOB PERFORMANCE THROUGH WORK MOTIVATION: A STUDY IN COMPANIES IN HO CHI

International School of Business

-

Nguyen Thi Ngoc Suong

IMPACT OF REWARDS MANAGEMENT

SYSTEM ON EMPLOYEE'S JOB

PERFORMANCE THROUGH WORK

MOTIVATION: A STUDY IN COMPANIES

IN HO CHI MINH CITY

MASTER OF BUSINESS (Honours)

Ho Chi Minh City - Year 2014

International School of Business

-

Nguyen Thi Ngoc Suong

IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE'S JOB PERFORMANCE THROUGH WORK MOTIVATION: A STUDY IN COMPANIES IN

HO CHI MINH CITY

ID: 22120069

MASTER OF BUSINESS (Honours)

SUPERVISOR:

Dr TRAN HA MINH QUAN

Ho Chi Minh City - Year 2014

ABSTRACT

Nowaday’s all firms or business entities are facing so many issues related to employee’s job performance and employee’s work motivation Getting people feel motivated to do their best work, is always one of the most challenges of managers in any organization And without motivation employees will not put up their best and the companys performance would be less efficient especially in developing countries where working conditions are unattractive As rewards have much impact on employees, which increase the level of job performance, this study was conducted to is to find out "Impact

of rewards management system on employee’s job performance through work motivation" in companies in Ho Chi Minh City With the analysis of data collected through Questionnaires distributed by respondents, this study indicates that there is a positive relationship of four mainly focused factors: pay factor, benefits, promotion and recognition of rewards management system, motivation and job performance of employees

Keywords: impact, rewards, rewards management system, work motivation, job performance

TABLE OF CONTENTS

Contents

ACKNOWLEDGEMENT 1

ABSTRACT 2

TABLE OF CONTENTS 3

Chapter I INTRODUCTION 5

1.1 Research background 5

1.2 Management problem 5

1.3 Research gap 6

1.4 Research objective 7

1.5 Research question 7

1.6 Research significance 7

1.7 Research scope 8

1.8 Research structure 8

CHAPTER 2 LITERATURE REVIEW 10

2.1 Motivation 10

2.2 Theories of motivation 11

2.3 Total rewards management system 15

2.4 Employee job performance 17

2.5 Relationship among rewards management system, motivation and employee’s job performance 18

2.6 Hypotheses 18

CHAPTER 3 RESEARCH METHODOLOGY 23

3.1 Research design 23

3.2 Data source and collection method 23

3.3 Measurement scale 24

3.4 Sampling design 26

3.5 Data analysis 26

CHAPTER 4 DATA ANALYSIS 29

4.1 Descriptive statistics of sample 29

4.2 Measurement scale 30

4.3 Exploratory Factor Analysis (EFA) 31

4.4 Correlation Analysis 36

4.5 Regression Analysis 38

4.5.1 Regression assumption checking 38

4.5.2 Hypothesis testing 40

4.6 Analysis of Variance (ANOVA) 44

CHAPTER 5 CONCLUSION AND RECOMMENDATION 47

5.1 Conclusion 47

5.2 Recommendations 48

5.3 Limitations 49

REFERENCES 50

APPENDIX 55

Chapter I INTRODUCTION

This chapter represents about introduction of the research which includes research background, management problem, gap, objectives, questions significance, scope and structure of the research

1.1 Research background

Nowadays, it is considered that human resource is the most important factor leading to the success or failure of a business all over the world, especially in Vietnam Development of human resource is one of the most important works in the development strategy in any organization A company can have a modern technology, good quality of service, and even good infrastructure, etc but it may hardly survive and build competitive advantages in the long term period if lacking of labor force doing work effectively

As Lawler (2003) said, the way that people are treated increasingly determines whether an organization will prosper or even survive An effective organization has to make sure that there is a strong cooperation and satisfaction among employees And in order to make employee perform their best in the organization, there is a need of effective motivation at various employee’s levels (Bedeian, 1993)

Motivation is a process that energizes, directs, arouses and sustains the behavior and performance of the employees (Luthans, 1998) Thus, motivation is the process that stimulates the employees to put their full efforts in order to achieve a desired task (Ishfaq Ahmed, 2011) And one considerable way to make employees motivated and perform the best in their job is using rewards management system (Deeprose, 1994) Because, the rewards have major impact on organizations capability to catch, retain and motivate high potential employees (Fay and Thompson, 2001)

1.2 Management problem

As the largest commercial and economic center of Vietnam, the economic activities of Ho Chi Minh City are always vibrant, and strongly attractive for foreign investments The economy in this city has grown at a rate of approximately 10% per year

of GDP each year However, there is a fact that, in the current context of global economic crisis, many companies in Ho Chi Minh City have to think about how to survive themselves and where to make necessary cuts so that the business will survive To do the cuts, they have to reduce staffs, but also keep core employees stay during the recession

In a meanwhile, there is always a fierce competition among companies to attract employees, especially those who are skillful and have good experiences through motivational programs That leads to difficulties of unstable human resource of a company when employees try to jump to other places where they think have better benefit and working mode like Vansteenkiste (2005) used to say: "Today employees are involved in their working activities which are for their benefits and feel intrinsic motivation in their behaviors as their activities are enjoyable and satisfactory"

Facing such situation, the big question for management of most companies in Ho Chi Minh City is how to make employees motivated to work most productively? It is really a big problem that any managers and leaders in Ho Chi Minh City concern about

1.3 Research gap

As a motivational method, rewards management system is being applied in many companies located in Ho Chi Minh City, especially those which have a big capital invested from abroad However, should the manager use financial aspects like bonuses, higher payrolls, pensions, sick allowances, and risk payments, etc as motivators in order

to enhance employee's job performance? If financial motivation has been failed, which aspect will come? While most managers tend to believe that they can adequately motivate their workers by offering rewards such as higher pay or bonuses, money may not work as

a motivation for all people because different people will act in different ways (Armstrong

& Stephens, 2005) In fact, there are only few employees who truly contribute their best

to the company but they have been just treated equivalently to those who work less effectively And some of employees feel demotivated when benefits of the company have been suddenly decreased due to the tough economic situation Hence, it leads to the less motivation on employees (Hai Anh, 2013) It means the important point is how to

recognize which kind of rewards should be applied for which kind of employee Undoubtedly, employees with different attitudes, behaviors, experiences, they need different way to promote their creativity and capacity as well Therefore, in order to motivate an employee so that he can perform his best in the job, it requires a flexible rewards system Although there are many studies about employee’s motivation and job performance in Viet Nam context, there is no official study mentioning about how to apply rewards management system effectively for various kinds of employees so that they all can be motivated This study is try to fulfill this gap by re-measuring the relationship as well as impact of rewards management system on employee’s performance with the mediating role of motivation, focusing on four main factors of rewards named pay factor, benefits, promotion and recognition

1.4 Research objective

As a consequence of above issue, objective of the study is to investigate the impact of rewards management system on employee’s performance with the mediating role of motivation then provides the support to management level on how to apply rewards management system effectively

1.5 Research question

The research will address the following specific questions:

1 Is there any relationship between rewards management system, employee's work motivation and job performance?

2 How does rewards management system impact on work motivation?

3 How does work motivation impact on employee’s job performance?

4 How to apply rewards management system effectively?

1.6 Research significance

In this changing world, employee’s motivation and job performance play important roles in the development of a company Therefore, this study tries to find out the answers of research questions and basing on that helps companies located in Ho Chi

Minh City could approach the effective rewards management system which would enable

their employees motivated to show the best job performance

1.7 Research scope

This study is limited to research on impact of rewards management system on employee’s performance with the mediating role of motivation in companies in Ho Chi Minh City To be convenient, and directly accessible to the objective, this study aims to employees who are currently working in companies in Ho Chi Minh City as the respondents for the questionnaire survey The questionnaire is distributed by respondents within July, 2014 The study will be ended by September 2014

1.8 Research structure

The structure is organized with five parts The first part is about the introduction

of the study The second one is an integration of literature and hypotheses The third is the discussion on research method Following that, the data analysis process and its findings are presented in the next parts And, conclusion of the research is consisting in the last part

Chapter 1 provides overview of research background, management problem that

companies in Ho Chi Minh City are facing As a result, research gap, research objectives, significances as well as research scope and research structure are identified It provides a brief insight into the study

Chapter 2 provides understanding of rewards management system, motivation

and employee’s job performance This chapter provides an insight into these concepts by focusing on previous research in this area and presents reviewed literature relevant to this study After that, hypotheses of the research are mentioned

Chapter 3 describes the research design which is utilized Specifically, the

chapter describes the sample of the study, measurement approached, how to follow to collect the data, and the technique used for data analysis

Chapter 4 focuses on transferring, analyzing the primary data then reports on the

results of the empirical analysis And based on the results, this chapter is to provide respective discussion as well as findings associated with above literature review

Chapter 5 comes to conclusion based on findings of the research with

recommendation

This chapter reflected on the objectives, significances as well as benefits of the research The following chapter will provide some insights into the concepts that have an impact on employee's work motivation and job performance

CHAPTER 2 LITERATURE REVIEW

The focus of this chapter is to provide understanding of rewards management system, work motivation and employee’s job performance as well as important relationship among rewards management system, motivation and employee’s job performance by focusing on the relating theories contents, arguments

2.1 Motivation

The term of motivation is usually explained as desires, emotions, needs that make someone do something In general, motivation is what causes us to act such as drinking a glass of water to reduce thirst or reading book to gain knowledge, etc

Motivation is "a set of processes concerned with the force that energizes behavior and directs it towards attaining some goal" (Baron, 1983) It inspires people to work individually or in groups in the ways such as to produce to best results to move toward a goal

Motivation can be divided into intrinsic and extrinsic motivation Intrinsic motivation refers to internal factors such as job satisfaction, responsibility, scope to develop skills which are driven by an interest or enjoyment in the task itself It concerns with the quality of work and has a deep and long effect Extrinsic motivation refers to external factors such as a promotion, raise, salary and benefit This kind of motivation can have an immediate and powerful effect to encourage an employee but will not really effect in a long term period Some employees are motivated intrinsically and other are motivated extrinsically, while most people tend to be motivated by both forms depending

on the task, time and other situational variables

There are many theories about motivation from the early beginning of 20th century In general, motivation theories can be grouped under categories of contents and process theories of motivation (Mujtaba 2014) The contents theories of motivation, which include Maslow’s Hierarchy of Needs, Alderfer’s ERG theory and Herzberg‘s Two Factor theory are in order to answer the question: "What things motivate people?"

And the process theories of motivation which include Vroom’s Expectancy theory, Adam’s Equity theory and Reinforcement theory are to answer the question: "How are

people motivated?"

2.2 Theories of motivation

2.2.1 Hierarchy of Needs theory

As one of the earliest theories of motivation, Hierarchy of needs theory was proposed by Abraham Maslow in his paper "A Theory of Human Motivation" in 1943 Maslow provided a new way of looking human behavior and understanding how humans are motivated by identifying five specific levels of needs that were organized in a hierarchy The needs are starting from the bottom and moving up to the top: physical, security, social, self-esteem, and self-actualization In that order:

Physiological needs: these include most basic needs such as need of food, water,

oxygen, salt, sugar; need to rest, to sleep, to have sex, etc When applying to organizations, according to Maslow, organizations have to pay employees with a suitable salary so that they can afford enough their living conditions

Safety needs is the second level of needs These needs are activated after

physiological needs are met They are needs of finding safe circumstances, stability, and protection Organizations have to provide employees safe working equipment, health insurance plans, fire protection so that they can do their jobs in safe and free environment without any fear or harm

Belonging needs: present as the third level of needs They are activated after the

second level of needs is satisfied Since people are social beings, they have a need to belong to and be accepted by various groups as well as a need find out meaningful relations with others Considering in organizations, leaders and managers should encourage employees to participate in company events, picnics, team building activities, etc

Esteem needs: present as the fourth level of needs which includes need of

self-respect, respect and approval by others Most people have a need for a high evaluation which is created by recognition and respect from others When these needs are satisfied, people become confidence and powerful People also feel that they are useful and have some affects on their environment Therefore, organizations should encourage employee many kinds of awards for their distinguished achievements

Self-actualization needs: occupies as the top level of needs Once esteem needs are

adequately satisfied, the self-actualization needs become activated in order to maximize ones’ potential As Maslow expressed: “What a man can be, he must be”, self-actualization is the desire to become what one is capable of becoming Individuals satisfy this need in different ways

Maslow’s theory provies two important insights for researcher and manager The first one is that not all people are motivated by similar things And the second one is that the same person is not always motivated by the same thing because his or her needs will change over time The bussiness should therefore offer different incentively motivational programs to different employees

According to the ERG theory, if a manager just concentrates on one kind of these needs at a time, it will not motivate his employee effectively Managers thus should understand that each employee has various needs that should be satisfied at the same time

According to Herzberg, once motivational factors are met, employee becomes motivated and hence performs higher Managers could use to achieve this by some following methods:

Job enlargement: is to give employees the variety of tasks which are not required

the level of challenge but can make the work more interesting

Job enrichment: is to involve employees in a wider range of more complex,

interesting and challenging tasks beside a complete unit of work This one can produce a greater sense of achievement

Empowerment: is to delegate more power to employees to make their own

decisions over areas of their working life

2.2.5 Expectancy theory

Developed by Vroom, Expectancy theory attempts to explain why individuals choose to follow certain courses of actions in organizations so that they can satisfy needs and thus becomes motivated According to Vroom, behavior that employees decide to

display depends on what they expect to achieve from the behavior and their motivation depends on their judgment of how they can perform and what they think that perform will earn

There are three levels that link to employees motivation: Expectancy- a desired level of performance, instrumentality- a desired level of outcome or reward and valence, the last level of how employees want or do not want the second level outcome The higher expectancy, instrumentality and valence are the higher level of motivation becomes for employees to complete the task with high performance

2.2.6 Equity theory

Developed by John Stacy Adam in 1963, Equity theory attempts to explain that motivation comes from input like skills, experience, time on job, seniority, etc and output like job title, benefits, salary, responsibility of an individual employee Depending

on the comparison of input and output factors, the employee can conclude whether his own input or output is equitable then he can reduce his input and increase his output and vice versa

2.2.7 Reinforcement theory

Reinforcement theory "states that individual’s behavior is a function of its consequences" (Management study guide 2013) Developed by B.F.Skinner, the theory explains that behavior modification depends on different types of reinforcement

techniques: positive reinforcement, negative reinforcement, extinction, and

punishment

Positive reinforcement: Give the incidence to individuals when they have

performed the desired behavior (Griggs, 2009) like praise when they are doing a good job

Negative reinforcement: it is also a technique of giving incidence of a desired

behavior to individuals But negative here doesn’t mean bad, it is just a removal of unpleasant stimulus

Extinction: this technique serves to decrease the incidence of an undesired

behavior It simply means ignoring a given behavior It is often an appropriate response for a minor behavior problem

Punishment: also designed to decrease the incidence of an undesired behavior It

does not fit in today value and may cause negative effects if it is applied incorrectly

2.3 Total rewards management system

Rewards management system is about the processes, policies, strategies and practices for rewarding its employees in accordance with their contribution, abilities and artifice By proving many appropriate types, levels of pays, benefit, and other forms of reward, etc rewards management system exits in order to motivate employees to work towards achieving strategic goals (Armstrong, 2003)

As Deeprose (1994) posits, effective rewards management system can help an organization to achieve its business objectives by attracting and retaining competent people The term of rewards management system itself is "significant, implying an active role for employers" in human resource management strategies (Stephen and Geoff, 2011) The rewards management system works when an organization wants to motivate employees to perform their best or when employees accomplished the organizational goal

It can be used to attract new employees while satisfying current employees It also increases efficiency and performance of the employees on their job which can contribute

on the success of the organization Thus, the rewards management system can help to reduce the turnover rate

2.3.1 Rewards management system applications

Rewards management system includes both Financial and Non-Financial Rewards which are also called as Extrinsic and Intrinsic Rewards

Extrinsic rewards are salary increase, bonus giving, or others tangible rewards

This type of rewards is beneficial because it can make the job context more favorable which makes employee stop thinking about leaving the company

Intrinsic rewards are promotion, praise, recognition, empowerment, etc These

types of rewards come from the content of the job itself, and encompass motivational characteristics of the job such as autonomy, role clarity and training (Hackman and Oldham 1976) They help to give personal satisfaction to individual Intrinsic rewards make employee motivated and feel happy with the company

There are as many elements to be addressed in a rewards management system as many researches, arguments relating to this topic

As Armstrong and Murlis (1991) suggest, four main areas that should be addressed in a rewards management system are:

- Pay structures in the organization basing on job evaluation;

- Benefits to satisfy the needs of employees for personal security by providing remuneration, allowances in forms other than pay;

- Non-financial rewards which satisfy employees’ needs for challenge, responsibility, influence in decision-making, recognition and career opportunities, etc.,

- And, performance management that provides the basis for continuing as well as formal reviews of performance against targets, goal setting per year of the employee

Hitt, Esser and Marriott (1992) argued that intrinsic rewards including feeling of challenge, recognition and responsibility; extrinsic rewards like pay, working conditions and security donated by management of an organization are valuable

Sarvadi (2005) proposes a strategic reward system should have four different elements namely compensation, benefit, recognition, and appreciation Among them, compensation which includes both of monetary and non-monetary rewards usually is put

in the top, and then followed by benefit

Another argument developed by Wilson in 1994 mentions that a positive reward system should be: meaningful and valuable to the individual; based on objective, goals; and balance between work condition in the workplace (extrinsic rewards) and fulfillment

of individual needs (intrinsic rewards)

2.3.2 Recognition

While most employees appreciate monetary rewards for job well done, many people simply need to be recognized as an individual or a member of a group when they did a good work Recognition is defined as "the timely, informal or formal acknowledgement of a person’s or team’s behavior, effort or business result that supports the organization’s goals and values, and which has clearly been beyond normal expectations" (Kim Harrison, 2004) Recognition can be taken by many forms like: thanks, praise, respect, job opportunity, safe work environment, right tools to do the job, etc It is a key success factor even at any levels of management which can make employees feel appreciated and valued (Sarvadi, 2005)

2.4 Employee job performance

Job performance is defined as "all the behaviors that employees engage in while at work" (Jex 2002) Job performance refers to how well someone performs at his or her work According to Ramlall (2008), a good employee performance is necessary for an organization, since the organization’s success is dependent on employee’s creativity, innovation and commitment

Generally, there are many research discussed about job performance as well as how to measure it However, the aim of this thesis is on relationship among rewards management system, job performance and work motivation Therefore, a key question to ask at this juncture is that: What is the relationship among rewards management system, motivation and job performance?

2.5 Relationship among rewards management system, motivation and employee’s job performance

In recent years, there are many researches were conducted on the same topic and prove that the more highly rewarded and recognized people are, the more motivation employees feel hence the better the employees perform their job

Futrell (1975) explains that “an employee would be motivated to expand a greater amount of effort in his work if he felt his previous effort had result in his receiving rewards.”

As Flynn (1998) said, rewards and recognition programs keep high spirits among employees create motivation for them and thereby, the employees understand their role in supporting the organization's goal and what they have to do to for the rewards As a result, the employees will perform at much higher performance levels

In the idea of Total Rewards in 2001, Gubman Consulting showed that

"employees look at all of the things offered when they are thinking about if they should

stay, leave or how hard to work" And, as Bob Nelson, author of "1001 Ways to Rewards

Employees" says, appreciation for your best performing people will enhance the

corporate image

Undoubtedly, rewards management system therefore can be powerful tool for employee motivation and job performance Since rewards play a vital role in determining the significant performance in job and it is positively associated with the process of motivation, organizations should provide employee relevant levels of rewards and recognition to make the employees motivated to perform their best in the business's long-term development

2.6 Hypotheses

There are many researches, papers conducted in general to determine which kinds

in rewards management system affecting on employee’s motivation and job performance However, there are four elements of rewards which were repeated many times on

afterwards relative researches Beside the important factor of recognition, the others are pay factor, employee benefits, promotion

2.6.1 Pay factor

Pay is an important job attribute from job rewards According to Pitts (1995), the principle reward for performing work is payment If employees are not satisfied with the rewards package, it will be hard for the company to keep good individuals Many employers thus offer reward packages of which wages and salaries are a part of As explained by Daniel Wren (2005), one lesson from the evaluation of management is that managers should not just focus on enhancing production alone but should also think about how their employees fit into the firm’s equation for success If the employees are rewarded with a fair wage, chances are very good that their employees will be motivated which may lead to better ways of doing the job (Mujtaba, 2010)

With above influences of pay factor, the first hypothesis is as below:

H1: Pay factor has a positive and significant impact on employee motivation 2.6.2 Benefits

Benefits that employee receive apart from pay play an important role in the rewards management system which is used to motivate employee Beer et al (1984) argued in his study that organization should reward employee because in return, they are looking for certain kinds of behavior: they need individuals who agree to work with their best Individual employees, in exchange, they expect to receive rewards of which benefits are important It is also may be acquired to allow employees to set themselves challenging goals that they may attain via differing means they may perceive as instrumental towards those goals (Spector, 2003) Organization therefore should motivate their employee by offering financial as well as non financial benefits (Simon and DeVaro, 2006)

So, from the importance of benefits, the second hypothesis is:

H2: Benefits has a positive and significant impact on employee motivation

2.6.3 Promotion

Every year, most of employees in an organization eagerly wait for the day when their efforts and achievements during the year would be evaluated and appreciated Beside incentives, rise in salary, employee benefits etc given to them, one of the most important factors in rewards management system to keep them motivated is "Promotion" Fair chances of promotion according to employee’s ability and skills make employee more loyal to their work and become a source of pertinent workability for the employee (Deeprose 1994) Promotions assign workers to jobs better suiting their abilities and quickly move up talented workers (Gibbons 1997)

Based on above arguments relating to importance of promotion in the way motivating employee, the third hypotheses is developed as below:

H3: Promotion has a positive and significant impact on employee motivation 2.6.4 Recognition

As presenting in above literature review, recognition is one of the most factors which can’t be lacked in rewards management system It is considered as "esteem needs"

in hierarchy of Maslow’s need theory Cash awards are good but in general, are not very effective in the long-term, and they are not always very popular either (Joinson, 1996), because many people want to be respected and valued for their contribution As Ali and Ahmed (2009) said, recognition can bring a positive change in work motivation of the employee When employees and their work are valued, their satisfaction and productivity rises, and as a result of this, they are motivated to maintain or improve their good work

Therefore, with the necessary of recognition in motivating employee, the fourth hypothesis is:

H4: Recognition has a positive and significant impact on employee motivation

La Motta (1995) states that job performance as the result of motivation and ability Ability here includes training, education, equipment, and simplicity of task, experience

An employee may still not perform well on the job if the motivation is not directed at that particular task Supporting on this idea, Lawler (2003) said that motivated workers will not achieve results if they do not have the necessary skills, expertise and attitude that the organization requires of them

H5: Motivation has a positive and significant impact on employee’s job

performance

Research Model:

According to above hypotheses, a research model of this study has been built as below:

Overall, this chapter is evident that a good reward management system can create people’s motivation and their willingness to do the best on their job Although there are many factors of rewards management system that influence employee's work motivation and job performance in companies in Ho Chi Minh City, this study just focuses on four main factors: pay factor, benefits, promotion, and recognition

CHAPTER 3 RESEARCH METHODOLOGY

In this chapter, the practical methods which were used in order to answer the research questions and fulfill the purpose of this study are presented

Quantitative method was based on already decided and well-structured questions, which all the respondents would be asked about By using questionnaire created from literature review, the research aimed to test the impact of four factor of rewards management system: pay factor, benefits, promotion and recognition on employee’s job performance through motivation It could be conducted on a large scale and give a lot more information as far as value and statistics

3.2 Data source and collection method

3.2.1 Primary data

Primary was collected by using a structured questionnaire The questionnaire was distributed in two different ways One was to send it by an e-mail attached a link to an online survey with the advantages of low cost and availability to cover a large group of participants And the second way was that the questionnaire was distributed directly by hand with the advantage of completion request right away

3.2.2 Secondary data

The secondary data came from books, articles, newspaper, online website and academic journals or articles The data helped researcher to be able to have a clear and full understanding about topic with the advantage of time and budget saving

3.3.1 Scale items of four main factor of rewards management system

Scale items of pay factor, and promotion and recognition were adopted from Robert Rosan Levina (2005):

Pay factor

PAY1 My salary is satisfactory in relation to what I do

PAY2 I earn the same as or more that other people in a

PRO1 I will be promoted within the next two years

PRO2 Everyone has an equal chance to be promoted

PRO3 Staffs are promoted in a fair and honest way

Recognition

REG1 I am praised regularly for my work

REG2 I receive constructive criticism about my work

REG3 I get credit for what I do

REG4 I am told that I am making progress

Scale items of benefits were adopted from Paul E Spector (1994):

BEN1 I am satisfied with the benefits I receive

BEN2 The benefits we receive are as good as most other

organizations offer

BEN3 The benefit package we have is equitable

BEN4 There are benefits we have which we should have

3.3.2 Scale items to measure employee's work motivation

With above four factors of rewards, motivation was measured by below items which are adopted from Mikander (2010):

MOT1 My employer encourages me to work

MOT2 I am satisfied with my salary

MOT3 I am satisfied with the amount of free time activity

that my employer arranges

MOT4 I get enough feedback from my employer

3.3.6 Scale items to measure employees' job performance

Measurement scales of job performance adopted from Rego and Cunhan (2008) were as the following:

Code Survey question

PER1 I believe I am an effective employee

PER2 I am happy with the quality of my work output

PER3 Accomplishes tasks efficiently Able to complete

tasks quicker as the employee gains experience

3.4 Sampling design

According to Hair et al (1998), the sample size using in Exploratory Factor Analysis (EFA) should be at least 50 and better at 100 and it should be equal or greater than the desired ratio of five times of observed variables So for this research, with 28 items from the measurement scale, the minimum sample size would be: n = 22 x 5 = 110

However, to make sure that the sample size can provide the confident level of the study, the size was considered at 200 The questionnaire therefore randomly asked 200 employees in different ages from 22 to 50 years old in different companies in Ho Chi Minh City

3.5 Data analysis

Raw data collected by questionnaire was entered into Statistic Package for Social Science software, version 20 (SPSS) Distribution of the data would be confirmed if they were satisfied the measurement and then they would be analyzed based on SPSS’s result There were some statistical tools to be applied in this study: Descriptive statistic, Reliability analysis, and Exploratory Factor Analysis (EFA) and ANOVA analysis

3.5.2 Reliability analysis

This method was used to measure the reliability of items of the variables in the questionnaires and determine the internal consistency of a question by the coefficient value of Cronbach’s alpha According to Nunnally & Bernstein (1994), the item which has "corrected item-total-correlation" index lesser than 0.3 will be rejected and Cronbach’s alpha index greater or equal to 0.6 will be accepted

3.5.3 Validity analysis

After computing Cronbach’s Alpha, the Exploration Factor Analysis method would be applied in order to explore the interrelationship among the variables In the implementation of EFA:

- The Kaiser - Meyer - Olkin (KMO) index which is used to evaluate the appropriateness of EFA method with the data should be from 0.5 to 1

- And, the signification level of Barlett’s test, which is used to test the null hypothesis that the variables in the population correlation matrix are uncorrelated, would be smaller than 0.05 (p<0.05)

3.5.4 Regression analysis

There were five hypotheses in this study to be analyzed by using the regression analysis in order to determine the affecting level of independent and dependent variables under the context of the study

3.5.5 ANOVA analysis

Finally, in order to determine whether there was any significant mean difference between biographic characteristics in work motivation and employee's job performance based on the basis of rewards management system, this study used ANOVA analysis technique

Overall, this chapter describes the research methodology which covered to research design, data collection procedures and also discussed about the technique to analyze the data in this study

CHAPTER 4 DATA ANALYSIS

In this chapter, the result of data analysis is presented and the findings are discussed

4.1 Descriptive statistics of sample

There were totally 200 questionnaires sent to employees in different companies in

Ho Chi Minh City, and got 192 respondents After collecting and checking data, there were 185 answers usable for the data analysis

Table 4.1 Demographic statistics of the respondents

Item Frequency Percentage

Single 148 80 Less than 1 year 16 8.6 Married 37 20 1- 3 years 148 80.0 Total 185 100.0 4 - 6 years 17 9.2

7 - 10 years 4 2.2 Total 185 100 According to above demographic statistic of the respondents, there was no big gap

of gender Among 185 respondents, 90 respondents were male, occupied 48.6% and 95 respondents were female, occupied 51.4% Similarly, there were 48.1% respondents from

22 - 30 years-old and 47 respondents from 31 - 40 years-old, 80% respondents are single and the remaining 20% were married Most of them were employees who have been working in the current company within 1 - 3 years and have university degree

Table 4.2 Cronbach's Alpha coefficient of each measurement scale:

Scale Mean if Item Deleted

Scale Variance if Item Deleted

Corrected Total Correlation

In the table 4.2, there were 4 items measuring Pay factor (PAY1 - PAY4)

Cronbach's Alpha value = 874 and all of items had high Corrected Item-Total Correlation index, so all items of this scale were accepted Similarly, items measuring the

other scales: Benefits (BEN1 - BEN4), Promotion (PRO1 - PRO3), Recognition (REG1

- REG4), Work Motivation (MOT1 - MOT4) and Job Performance (PER1 - PER3)

were accepted because the corresponding Cronbach's Alpha was greater than 0.6 and the Corrected Item-Total Correlation index was greater than 0.3

After reliability testing, all of items therefore were put into next Exploratory Factor Analysis (EFA) step There were 15 items for independent variables and 7 items for dependent variables

4.3 Exploratory Factor Analysis (EFA)

4.3.1 Assessing the scales measuring for independent variables

There were 15 items measuring four variables in the first EFA The result for independent variables showed that KMO indicator was quite high It was 823, bigger than 0.5 And, Chi-Square of Bartlett's test reached the value 706.714 and value p equals 0.000, less than 0.05 Hence, EFA method was applicable in this study

Table 4.3 KMO and Bartlett's Test for independent variables

KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .823

Bartlett's Test of Sphericity Approx Chi-Square 706.714

In order to identify how many factors could be extracted from these 15 items, the Principal Component Analysis (PCA) method with Varimax Rotation was applied to find out the result

Table 4.4 Total Variance Explained for independent variables

Total Variance Explained

Comp

onent

Initial Eigenvalues

Extraction Sums of Squared Loadings

Rotation Sums of Squared

Loadings

Total

% of Variance

Cumulat ive % Total

% of Varia nce

Cumulat ive % Total

% of Variance

Cumulat ive %

Extraction Method: Principal Component Analysis

The result of EFA for 15 items of independent variable showed that there were four extracted factors The Eigen value for each factor was bigger than 1 and the final

Eigen value was 1.104 The total extracted variance for four factors which was 73.613% explained 73.613% variation of the data

Table 4.5 Rotated component matrix for independent variables

Rotated Component Matrix(a)

Extraction Method: Principal Component Analysis

Rotation Method: Varimax with Kaiser

Normalization

The final EFA result showed that all items were good because they clearly loaded one factor Only item REG2 should be remarkable because it loaded into two factors However, the difference value between these two factor was just 0.704 - 0.415= 0.289, less than 0.3, so it could be considerably kept for next regression analysis

In conclusion, there was no item rejected and all four factors had discriminative validity So, four main factors of rewards management system were kept as initially: PAY FACTOR, BENEFITS, PROMOTION and REGCONITION

4.3.2 Assessing the scales measuring for dependent variables

There were 4 items measuring dependent variable - MOTIVATION with the same above analyzation method

Table 4 6 KMO and Bartlett's Test for dependent variable - MOTIVATION

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

The KMO was equal to 0.759, bigger than 0.5 and its significant value p was equal

to 0.000, less than 0.05 Means, the EFA method was applicable

Table 4.7 Component Matrix for dependent variables

Having the same analysis method, dependent variable - JOB PERFORMANCE was measured by 3 items: PER1, PER2, and PER3

Table 4 7 KMO and Bartlett's Test for dependent variable - JOB PERFORMANCE

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

4.4 Correlation Analysis

In order to determine if independent variables (PAY, BEN, PRO, and REG) had any relationship with dependent variable (MOT) and MOT with PER, the Pearson Correlation coefficient was calculated

The results of the Pearson Correlation Analysis of this study were shown as below: Table 4.9 Pearson Correlation Analysis

** Correlation is significant at the 0.01 level (2-tailed)

Table 4.10 Correlation between Motivation and Job Performance